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The turbulence in the markets continued through last week, although they closed on a strong note. The losses from the previous 7 trading sessions were made up in the 2 ½ days following the Federal Reserve’s press conference on Wednesday.

The gains in the S&P500 were hefty and broad, including a strong showing in the Energy sector. Could this be the prelude to the much anticipated Santa Claus rally? We’ll just have to wait and see. Personally, I’m sitting this dance out. I’ve taken my profits for the year and will be building my watch list for 2015.

Since August the market has taken on a decided change in personality. The 50 day moving average (dma) has been breached 3 times and the 200 dma once. The break below the 200 dma was the first in nearly 2 years. The pullback in October had the highest average selling volume since the downtrend of September 2011. That hints of Institutional Investors taking money off the table.

In my opinion the shift in personality from a relatively stable market over the past 18 months might be a forewarning of a choppier 2015, reminiscent of the unrest in 2011. As the year comes to an end, I’ll be watching to see if the S&P500 can break out above 2079.50 in STRONG VOLUME. If not, perhaps we’ll see another deeper pullback in early Q1.

Best returns and merry Christmas to all !

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